Indian exporters of perishable goods are asking for a uniform GST (Goods and Services Tax) rate of 5% on both sea and air freight. Currently, sea freight is taxed at 5%, while air freight is taxed at 18%, making exports more expensive. The exporters have submitted their requests to the government before the upcoming GST council meeting.
According to Kaushal Khakhar, CEO of Kay Bee Exports, the 18% GST on air freight significantly impacts exporters’ working capital, as air freight can make up 60-70% of the consignment cost. He noted that reducing the GST on air freight would not affect net tax revenue because exporters already claim refunds. However, it would ease their working capital requirements and reduce administrative overhead for both the government and exporters.
The request for a lower tax rate comes at a time when India is looking for new export markets. Last year, India’s farm and fish exports were valued at $52 billion, of which $6 billion were sent to the US and are now at risk due to the 50% tariff imposed by the Trump administration. Aligning the GST rate with that of sea freight would provide relief to exporters and support the “Make in India” initiative.